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Further reading

"The sequential decline in third quarter sales was primarily due to the aggressive actions we took in the PC supply chain to align our product mix with current customer and end-user demand, which has been less than we forecasted," Chief Financial Officer Robert Rivet said in a statement.

In forecasting for the fourth quarter, AMD officials said they expect sales of Flash memory devices and PC processors to increase, and that the company will reduce its loss compared to the third quarter.

The poor numbers came about two weeks after AMD warned that it would post a higher than forecasted loss. AMDs finances have taken a hit not only because of the sluggish economy but also because of its efforts to compete with Intel Corp., of Santa Clara, Calif., in the lucrative high-end space. Over the last year, Intel not only has widened the speed gap between its own Pentium 4 chips and AMDs Athlon XPs, the two companies also have engaged in a price-cutting war that has hurt the profit margins of both chip makers.

AMD, of Sunnyvale, Calif., also hurt itself this year by delaying the release of its 64-bit desktop chip, code-named Clawhammer, from the fourth quarter until early next year.

Intel on Tuesday announced its own third-quarter earnings, including a net income of $686 million—an improvement over $106 million it netted during the same period last year—on sales of $6.5 billion.

Still, like AMD, Intel painted a dour picture for the industry, particularly during the holiday season, traditionally the strongest quarter of the year.